At long last, a federal agency will oversee the powerful consumer reporting agencies that collect data on Americans’ finances. Starting Sept. 30, the new Consumer Financial Protection Bureau will begin supervising about 30 of these companies, which together control about 94 percent of a $4 billion market. It will be able to monitor the companies on-site and, if necessary, write new rules aimed at improving the industry’s service.

It may surprise many Americans to learn that so many credit reporting companies exist. Most know of only the big three (Equifax, Experian and TransUnion). Yet these multiple, highly private enterprises can have an enormous effect on Americans’ lives. Data they collect on loan payments and credit card histories can affect whether applicants may borrow money (and at what rate), rent an apartment or even get hired for a job.

Unfortunately, too often the information is wrong. Studies have found error rates as high as 25 percent. Consumers can wind up spending hours rectifying their histories. Not surprisingly, horror stories abound. At a recent hearing held by the CFPB in Detroit, a 65-year-old woman told of being listed as dead by the big three agencies. Two took her word for it that she was alive, but one demanded notarized documentation.

Under the Fair Credit Reporting Act of 1970, credit reporting companies are required to fix errors. But for years this has been a largely self-policing operation. “Investigations” often consist of credit bureaus’ simply checking back with companies seeking to collect, and sticking by the original numbers.

With the CFPB involved, consumers should finally have someone on their side, not to mention a clearer picture of how the credit reporting companies actually work. It’s a development long overdue.

— The Providence (R.I.)

Journal